Commentary: Consider bust-and-boom cycles when choosing degrees

One of my most memorable interviews after moving to Texas in 1986 was with a geologist who had lost his energy job and couldn't find another one. He was selling cars to support his family.

He recalled the heady days when he had the power to buy expensive equipment and supplies with his corporate checkbook; in his new job, he had to ask the manager for permission to throw in a set of $40 floor mats to seal a deal.

When the bottom fell out of the Texas economy, thousands of petro experts lost their jobs. The geologists, geophysicists and petroleum engineers struggled to reinvent themselves, with many vowing to find an industry that wasn't so volatile.

The image problem of booms followed by busts persisted for decades and made the energy industry unattractive to many promising students. But as the price of oil started rising, and then kept going up, memories of the tough times began to fade.

Fast-forward to 2013, and oil is again king. At the moment, there is no hotter degree in Texas than petroleum engineering. It's probably not hard to figure out why, given the price of oil hovering around $107 a barrel.

The Texas Higher Education Coordinating Board puts the 2011 average starting salary at $84,298 for petroleum engineers. According to PayScale.com, which surveys more than 1,000 colleges, it's $98,000.

But every Texan of at least a certain age knows that the price of a barrel won't stay high forever. At some point, today's hottest degree could be worth about as much as some of the historically lower-paying degrees such as psychology and fine arts.

“I enjoyed the booms,” recalled Stan S. Thurber, who graduated with a master's degree in petroleum engineering from the University of Texas in 1968.

Thurber, who got about 10 job offers as he finished his degree, kept delaying the start of his new position in California. The company couldn't have been more accommodating, he recalled, and kept boosting his starting salary to keep up with the wages of other new petroleum engineers.

“But the busts were tough,” said Thurber, recalling how he didn't work much between 1989 and 1991. He ended up going back overseas, that time to Qatar.

“If you have enough financial resources built up to ride between the busts, you'll do OK,” he said. And make sure you have health insurance because buying it on the open market is so expensive.

Over his career, Thurber has spent many years working abroad as well as in the United States, which he continues to do as an independent consultant.

While he has enjoyed petroleum engineering, Thurber said he isn't sure he'd recommend it today as a career.

First of all, study what you enjoy, he said. If that's engineering, consider studying chemical or mechanical engineering, which can be applied to a wider range of industries.

Engineering itself — not just petroleum engineering — has had a fairly regular pattern of ups and downs, said Barton Smith, professor emeritus of economics at the University of Houston.

When demand is high and salaries are good, everyone rushes into the field, he said. But when the market settles down, demand and salaries dip, too.

It doesn't have to be a bust like the one Texas experienced in the mid-1980s, he said.

“You just have to have the labor market go back to normal. But then you have this huge supply of engineers who were attracted by high salaries five to six years earlier.”

It's not just engineering. Think back to 2006, when Wall Street was humming and the financial markets were on fire. If you started college that year and got a Master of Business Administration with a focus on finance by 2012, the entire landscape had changed.

Demand had dropped, and yet there were thousands of other graduates looking for MBA finance openings, he said.

Smith's advice? “Try to look forward as much as you can.”

But at the same time as you try to gauge what is likely to be hot by the time you graduate, keep a close eye on another factor — the supply of others with the same expertise.

Are new programs popping up? Are universities expanding their programs to accommodate more students? Are the classrooms bursting at the seams with other students?

“If everyone and their dog is getting an MBA in finance,” Smith said, “pause and think about whether it will be a crowded market when (you) get out.”

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One of my most memorable interviews after moving to Texas in 1986 was with a geologist who had lost his energy job and couldn't find another one. He was selling cars to support his family.

He recalled the heady days when he had the power to buy expensive equipment and supplies with his corporate checkbook; in his new job, he had to ask the manager for permission to throw in a set of $40 floor mats to seal a deal.

When the bottom fell out of the Texas economy, thousands of petro experts lost their jobs. The geologists, geophysicists and petroleum engineers struggled to reinvent themselves, with many vowing to find an industry that wasn't so volatile.

The image problem of booms followed by busts persisted for decades and made the energy industry unattractive to many promising students. But as the price of oil started rising, and then kept going up, memories of the tough times began to fade.

Fast-forward to 2013, and oil is again king. At the moment, there is no hotter degree in Texas than petroleum engineering. It's probably not hard to figure out why, given the price of oil hovering around $107 a barrel.

The Texas Higher Education Coordinating Board puts the 2011 average starting salary at $84,298 for petroleum engineers. According to PayScale.com, which surveys more than 1,000 colleges, it's $98,000.

But every Texan of at least a certain age knows that the price of a barrel won't stay high forever. At some point, today's hottest degree could be worth about as much as some of the historically lower-paying degrees such as psychology and fine arts.

“I enjoyed the booms,” recalled Stan S. Thurber, who graduated with a master's degree in petroleum engineering from the University of Texas in 1968.

Thurber, who got about 10 job offers as he finished his degree, kept delaying the start of his new position in California. The company couldn't have been more accommodating, he recalled, and kept boosting his starting salary to keep up with the wages of other new petroleum engineers.

“But the busts were tough,” said Thurber, recalling how he didn't work much between 1989 and 1991. He ended up going back overseas, that time to Qatar.

“If you have enough financial resources built up to ride between the busts, you'll do OK,” he said. And make sure you have health insurance because buying it on the open market is so expensive.

Over his career, Thurber has spent many years working abroad as well as in the United States, which he continues to do as an independent consultant.

While he has enjoyed petroleum engineering, Thurber said he isn't sure he'd recommend it today as a career.

First of all, study what you enjoy, he said. If that's engineering, consider studying chemical or mechanical engineering, which can be applied to a wider range of industries.

Engineering itself — not just petroleum engineering — has had a fairly regular pattern of ups and downs, said Barton Smith, professor emeritus of economics at the University of Houston.

When demand is high and salaries are good, everyone rushes into the field, he said. But when the market settles down, demand and salaries dip, too.

It doesn't have to be a bust like the one Texas experienced in the mid-1980s, he said.

“You just have to have the labor market go back to normal. But then you have this huge supply of engineers who were attracted by high salaries five to six years earlier.”

It's not just engineering. Think back to 2006, when Wall Street was humming and the financial markets were on fire. If you started college that year and got a Master of Business Administration with a focus on finance by 2012, the entire landscape had changed.

Demand had dropped, and yet there were thousands of other graduates looking for MBA finance openings, he said.

Smith's advice? “Try to look forward as much as you can.”

But at the same time as you try to gauge what is likely to be hot by the time you graduate, keep a close eye on another factor — the supply of others with the same expertise.

Are new programs popping up? Are universities expanding their programs to accommodate more students? Are the classrooms bursting at the seams with other students?

“If everyone and their dog is getting an MBA in finance,” Smith said, “pause and think about whether it will be a crowded market when (you) get out.”